Lloyds Profit Rebound in 2013 to Allow Share Sale, CEO Says

Lloyds Banking Group Plc Chief Executive Officer Antonio Horta-Osorio said, “We expect this to enable us to return to profitability this year and to grow our core business, to realize our full potential to deliver strong, stable and sustainable returns for you, the shareholders, and to allow U.K. taxpayers’ investment in the group to be repaid.” Photographer: Jason Alden/Bloomberg

May 16 (Bloomberg) -- Lloyds Banking Group Plc will return
to profitability in 2013, allowing the government to start
selling its stake in the lender, Chief Executive Officer Antonio
Horta-Osorio said.

“We expect this to enable us to return to profitability
this year and to grow our core business, to realize our full
potential to deliver strong, stable and sustainable returns for
you, the shareholders, and to allow U.K. taxpayers’ investment
in the group to be repaid,” Horta-Osorio, 49, said at the
lender’s annual general meeting in Edinburgh today.

Lloyds, which ceded a 39 percent stake to the U.K. state
after its 20 billion-pound ($30.4 billion) bailout in 2008,
posted an almost threefold increase in first-quarter profit as
impairments for souring loans dropped. London-based Lloyds
shares have risen 27 percent this year, and closed yesterday
virtually at the 61 pence a share level at which the government
says it will break even.

The shares gained 2.6 percent to close at 60.9 pence in
London trading, the first time the stock has risen above 60
pence since April 2011.

“We will make a statutory profit this year,” Finance
Director George Culmer said on the sidelines of the meeting.
“You’ll see a strong pick up in underlying profitability, which
is great news and what our strategy is all about.”

Lloyds Chairman Win Bischoff said this month he would
retire in the next 12 months, confident the bank’s rebound from
its rescue had progressed enough for him to plan his succession.

Chancellor of the Exchequer George Osborne is seeking to
reduce the taxpayers’ stake in the lender before a general
election due in 2015. Osborne, constrained by the biggest
austerity program since World War II, could use the proceeds of
a sale to fund tax cuts or more spending before the vote.

Earlier this year, the Treasury reduced the price below
which it would recognize a loss from selling its stakes in
Lloyds and the Royal Bank of Scotland Group Plc to take into
account fees the lenders paid the Treasury, officials with
knowledge of the matter said in March.

Lloyds’s bailout stemmed from its government-brokered
takeover of HBOS Plc during the financial crisis. Since then, a
turnaround has been hampered by about 6.8 billion pounds of
redress for improperly sold loan insurance and 12.1 billion
pounds of losses tied to the real estate collapse in Ireland.